American Hotel Income Properties REIT 6 00 Convertible Unsecured Subordinated Debentures T.HOT.DB.V

Alternate Symbol(s): AHOTF | T.HOT.UN

American Hotel Income Properties REIT LP is a trust that invests in hotel real estate properties. The company's primary business is owning Premium Branded hotels, which have franchise agreements with international hotel brands including Marriott, Hilton, and IHG. It generates revenue from the room, food, beverage, and other revenue. The other revenue is comprised of conference room rentals, parking revenues, and other incidental income.

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American Hotel Income Properties REIT 6 00 Convertible Unsecured Subordinated Debentures > All the momentum has evaporated

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Comment by JayBankson Nov 19, 2021 3:15am

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Post# 34144250

RE:RE:RE:RE:RE:RE:All the momentum has evaporated

sclarda wrote:

In the third quarter they had AFFO of aprox. $12.4 million US. On an annualized basis that would be aprox. $50 million US although the business is seasonal so some other quarters may have less income and others may have more.

Lets say they bring in aprox. $45 million US per year in AFFO. The dividend next year of 18 cents US per year on aprox 80 million shares will cost aprox. $16 million US. That would equal an AFFO payout ratio of aprox. 35% and leave HOT with aprox. $ 29 million US per year after paying the dividend.

So it appears with a 35% payout ratio there is a lot of room for future dividend increases. They are being cautious as they dont know how much business they will have next year because things are still unsure with Covid and the economy in general.

They also want to build a nice cash hoard in case business slows way down again. That is good management in my opinion.Give shareholders a smalll dividend now and bank the rest for a rainy day. If things go good next year they can always increase the dividend although i would not bet on that happening for awhile.

With the current income if they wanted to get back to a 90% payout ratio which is where they were before Covid which i believe is way to high they could eventually payout a 50 cent US annual dividend which would equal aprox. 62 cents Cdn. or an aprox. 15% yield at todays shareprice.

A more resonable dividend would be using 60% of AFFO for a dividend which would equal aprox. 35 cents US per year or aprox. 43 cents Cdn. which equals a yield of over 10 % at todays shareprices while still leaving HOT with aprox. $18 million US per year in AFFO after paying the dividend which can be used to pay down debt, do renos, or buy more properties or buyback shares. These numbers are with the current AFFO. If the economy improves next year and HOT gets more business in its hotels of course AFFO could be higher while of course it could also be lower if business gets worse.

So in the longer run there is good potential for a much higher yielding dividend depending on how things go in the next year or two.